Playing a losing game with China

There was so much hype about the Philippines’ pivot to China, but there are no significant results until now. After President Duterte’s visit to China last month, his fifth, we can’t help but ask whether the foreign policy shift has indeed translated to tangible benefits for Filipinos.

The stronger and warmer Philippine-China bilateral relations were expected to boost investments, provide additional capital to finance the so-called golden age of infrastructure in the Philippines, and promote peace and stability in the West Philippine Sea.

However, as the noted American historian Alfred McCoy has put it, Mr. Duterte is playing a dangerous game with China. Are we gaining or losing momentum in the game that we are playing with Beijing? Are we getting the mutual benefit and respect that we have envisioned for the Philippines?

Many political experts have warned the Duterte administration that the Philippines has more to lose with its ‘policy of appeasement.’ The asymmetric trade relations have not changed over time. China remains the biggest supplier of imported goods to the Philippines, with a 23-percent share of total imports in July 2019. According to the Philippine Statistics Authority, import payments from China reached $2.20 billion from $1.91 billion in July 2018. On the other hand, our exports to China have only reached $860.19 million as of July 2019.

So far, we have not benefited significantly from China loans to support our infrastructure development. Contrary to the $9 billion worth of official development assistance (ODA) promised in 2016, China’s ODA to the Philippines as of March this year has only reached $364.92 million, which accounts for 2.03 percent of the total net active ODA. The amount consists of $273.30 million worth of loans and $91.62 million worth of grants. There are two flagship projects that will be funded through China loans as of March 2019: the Chico River Pump Irrigation Project ($83.01 million) and the New Centennial Water Source Kaliwa Dam ($231.59 million).

As of March 2019, Japan remained the biggest source of ODA, accounting for 46 percent of the $17.9 billion total net commitment of active ODA received by the Philippines. Japan has provided a total of $8.2 billion worth of ODA.

Mr. Duterte, in his opening remarks during last month’s bilateral meeting with Chinese President Xi Jinping, emphasized ‘a stronger momentum’ to work together with China. He also cited the need for the two countries to determine steps to create a ‘strong and special relationship that is mutually respectful, collectively beneficial, and decidedly reciprocal.’

However, the rising incidents of incursions, cases of harassment of Filipino fishermen and other aggressive acts in the West Philippine Sea cannot be considered as actions based on mutual respect, reciprocal friendship and goodwill.

While the Philippines has given China more concessions and privileges because of the so-called renewed friendship, Xi has continued to reject the outcome of the arbitral ruling, which legally invalidated China’s supposed ‘nine-dash line’ claim to seize the whole South China Sea as part of its sovereign territory.

The Philippines, in fact, was hit by a double whammy during Mr. Duterte’s last visit to China. First, there was Beijing’s outright rejection of the landmark ruling. Second, Xi stressed that the two countries should ‘set aside disputes, eliminate external interference, and concentrate on conducting cooperation, making pragmatic efforts and seeking development.’ He then challenged the Philippines to take a ‘bigger step’ in the joint development of offshore oil and gas.

These developments only put the Philippines in a more disadvantaged position. Instead of the country being able to maximize the use of its natural resources in the West Philippine Sea, its aggressive neighbor China might end up getting the bigger part of the planned joint exploration deal between the two countries.

Given these lackluster trade benefits and economic aid so far, there is a need to reexamine the deference being given to China at the expense of pursuing the arbitral award won by the Philippines.

The time to stand as a nation is now. Under the current circumstances, the Philippines is not only undermining its legal victory, it is not even gaining the economic rewards expected from such a Beijing-friendly stance.

The next generation of Filipinos shouldn’t have to pay the price of losing their pride and sovereignty as a nation in pursuit of an ill-considered foreign policy. The Philippines’ sovereignty and sovereign rights shouldn’t be compromised with any form of aid or investments, let alone vague promises of them.

Dindo Manhit is founder and managing director of the Stratbase Group, and president of the Stratbase ADR Institute.